One month after the implementation of stricter delisting criteria aimed at eliminating underperforming companies, 7.4% of domestic listed companies have failed to meet the required market capitalization standards.
According to an analysis by the corporate research institute Leaders Index, as of the end of July, 192 out of 2,578 listed companies, including 833 on the KOSPI and 1,745 on the KOSDAQ, did not meet the average market capitalization requirement for maintaining their listings.
As of July 1, the market capitalization thresholds for maintaining listings were raised to 30 billion won for KOSPI companies and 20 billion won for KOSDAQ companies.
Among KOSDAQ-listed companies, 152, or 8.7%, fell short of the 20 billion won requirement, while 40 KOSPI companies, or 4.8%, did not meet the 30 billion won threshold.
The criteria for delisting have been strengthened not only regarding market capitalization but also concerning stock prices, capital impairment, and disclosure violations.
New rules stipulate that companies whose stock prices remain below 1,000 won for a certain period may face delisting. Additionally, the criteria for substantial review of listing eligibility now include complete capital impairment over a half-year period. The threshold for cumulative penalties due to disclosure violations has also been lowered from 15 points to 10 points over the past year.
Next year, the market capitalization requirements are set to increase further, with thresholds of 50 billion won for KOSPI and 30 billion won for KOSDAQ, raising concerns that more companies may fall short of these standards.
Applying the upcoming criteria to the average market capitalization from July, it is projected that 18.6% of all listed companies, or 479 firms, would not meet the requirements.
By market segment, 367 KOSDAQ companies (21.0%) would fail to meet the criteria, exceeding one in five, while 112 KOSPI companies (13.4%) would also fall short.
There remains a significant number of 'penny stocks' with prices below 1,000 won. Based on the average closing prices in July, 200 companies, or 7.8% of all listed firms, had stock prices below 1,000 won, including 156 KOSDAQ companies (8.9%) and 44 KOSPI companies (5.3%).
If a common stock price remains below 1,000 won for 30 consecutive trading days, the company is designated as a management issue. If the stock price does not exceed 1,000 won for at least 45 out of the following 90 trading days, it may meet the criteria for delisting.
A representative from Leaders Index stated, "If stock prices do not recover in the second half of this year or if companies fail to increase their market capitalization through capital increases, the number of companies at risk of being designated as management issues may increase with the stricter criteria next year."
* This article has been translated by AI.
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